Government divestment from 10 state-owned enterprises is a good move for the local market, a leading economist said.
Economist Nguyen Tri Hieu
"It's understandable that the government is trying to speed up the process of state-owned enterprise restructuring. Those 10 firms seem to have economic advantages that enable them for easy divestment," Nguyen Tri Hieu, an independent director on the board of Ocean Bank, said.
The State Capital Investment Corporation (SCIC) has been given approval by the prime minister to divest from 10 firms, including its stakes in FPT Corp and its subsidiary FPT Telecom. The government will divest all of its 45 percent stake in Vietnam Dairy Products JSC (Vinamilk), one of the country's top firms. The plan, which is estimated to worth USD3 billion, is considered the biggest divestment from the state yet.
Hieu, who has 30 years of experience working in the banking sector in the US, Germany and Vietnam, said one of the reasons for the divestment move was to help balance the state budget amid falling oil prices, rising debt and the lack of success in bond issues.
"Vinamilk is not related to national security in any way," he said. "The government can't continue competing and subsidising the market just for those profits."
Hieu said divestment will bring more benefits, not least because private firms have better management and results, but he doubted the move would attract foreign investment to fill the gap.
"These firms will have to change to meet customers' demands and better competitiveness," he said. "Firms with good business have a better chance at attracting foreign investments. Some investors may be interested in firms that are given preferential treatments. But when commitments to the TPP (Trans-Pacific Partnership) or the FTA (Free Trade Agreement) go into effect, preferential treatment may be withdrawn for fairer competition."
Rules about foreign ownership in many sectors remain unclear.
